Why Blue Apron Stock Was Slipping Today
What happened
Shares of Blue Apron (NYSE: APRN) were sliding today alongside the broader market as the meal-kit provider's roller coaster ride continued. The stock tumbled through much of December on concerns that it could be de-listed or simply that the company will never be profitable and will eventually go bankrupt. Toward the end of the month, the stock surged on news of a new deal with WW (formerly known as Weight Watchers) for co-branded meal kits.
Though there was no significant news today on Blue Apron, pressure from the market sell-off pushed the stock down 6.5% as of 11:19 a.m. EST on Thursday.
Image source: Blue Apron.
So what
Blue Apron made one small announcement this morning, saying it was awarded the prestigious Safe Quality Food certification for food safety across all three of its fulfillment centers.
But that news was widely ignored. Instead, the stock seemed to fall due to the broad-market sell-off. The major news of the day was Apple's revenue guidance cut due to weak iPhone sales in China, which has no effect on Blue Apron. But other indicators showed the economy weakening, as a manufacturing activity index came in below estimates.
Now what
As something of a luxury product, Blue Apron would be particularly vulnerable to a recession, especially since the company is already losing customers and remains unprofitable. If its customers feel the economy weakening, it's easy enough for them to cancel their subscriptions and simply save money by buying groceries at the supermarket like most Americans do.
The first quarter is also seasonally Blue Apron's strongest as the company capitalizes on New Year's resolutions, along with cold weather that keeps more Americans inside and cooking, rather than going out to eat. That means that any economic warnings now are especially risky for the company.
With the stock flirting with the $1 mark, the shares should continue to be volatile over the coming months as the macroeconomic outlook comes into focus and investors see if Blue Apron can deliver adjusted EBITDA profitability this year, as management has promised.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.
